Trying to maximise the benefits that an economy can get from natural resources poses various challenges, and sometimes, those challenges are so big that natural resources transform from a blessing into a curse. This can happen in many ways, including the threat of armed conflict, a fate that the GCC countries have fortunately avoided despite the abundance of oil in the region. But what is the precise mechanism by which this form of conflict arises, and how do policymakers protect their economies from it?
At a fundamental level in an economy, there are two ways for an individual to improve their standard of living: resource production, and resource expropriation.
Resource production refers to creating value by manufacturing goods and delivering services that others voluntarily acquire in exchange for their own goods and services, or for money that can be used to purchase goods and services from third parties. Think of a fisherman catching fish, selling it in the market and using the proceeds to feed and clothe his family.
Resource expropriation refers to seizing the value created by others, by physical coercion, also known as banditry. It includes pirates boarding a ship and acquiring its cargo under the threat of violence.
Resource production is about enlarging the economic pie, whereas resource expropriation is about redistributing the pie without growing it, and possibly by shrinking it, as violence often destroys value – think of a burglar damaging your house as he steals your possessions. Therefore a successful economy will have as much production and as little expropriation as possible; how can we minimise banditry?
The incentive to expropriate others is based on two factors: the size of the prize, and the punishment in case of failure. All governments strive to punish those who seek to seize the property of others, but no legal system can provide perfect protection. The problem in resource-rich countries is that the prize – control of a precious mineral or fossil fuel – can be huge, meaning that bandits expend super-normal energy in an effort to control the resource.
That is why many countries that have large endowments of natural resources contain multiple heavily armed militias, engaged in perpetual combat as they vie for control of resource revenues. An example is what befell Congo (now known as the Democratic Republic of the Congo) in the early 1960s, a crisis in which perhaps 100,000 people died.
The resulting deterioration in security is catastrophic for the economy: insecure property rights are a recipe for low investment in physical and human capital, and they greatly impair the economy’s ability to benefit from global trade and finance.
This problem is reinforced by the fact that many valuable natural resources, including oil, diamonds and gold, have productive processes that are capital-intensive and require only limited numbers of workers. This makes it easier for expropriators to quickly establish their own work teams, and limits the violent force necessary to generate revenues. In contrast, in countries such as Japan and Singapore that lack these types of resources, the easiest way to acquire wealth is to create it via cooperative and voluntary exchange with others. Trying to build PlayStations or operate banks by coercion would quickly result in an unprofitable and unsustainable enterprise.
Resource-rich countries such as Australia, Norway and the GCC countries have been fortunate to have had stable governments that emphasise property rights, halting would-be-bandits in their tracks. The resulting favourable security conditions have allowed for the attraction of foreign capital, and the investment of the natural resource wealth in improving the local economy.
Other, less fortunate countries have discovered natural resources during periods of poor governance, motivating groups to focus on violent expropriation as a way to improve their living standards, even if it comes at the expense of the economy taken as a whole. As the armed conflict increases in frequency, citizens will be left longing for the days before the discovery of natural resources, which is why the blessing of natural resources can sometimes turn into a curse.
Omar Al Ubaydli is programme director for international and geopolitical studies at the Bahrain Center for Strategic, International and Energy Studies, and an affiliated associate professor of economics at George Mason University. He welcomes economics questions from readers via email (omar@omar.ec) or tweet (@omareconomics).
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MATCH INFO
Uefa Champions League semi-finals, second leg:
Liverpool (0) v Barcelona (3), Tuesday, 11pm UAE
Game is on BeIN Sports
More from Neighbourhood Watch:
SCORES IN BRIEF
New Zealand 153 and 56 for 1 in 22.4 overs at close
Pakistan 227
(Babar 62, Asad 43, Boult 4-54, De Grandhomme 2-30, Patel 2-64)
Who are the Soroptimists?
The first Soroptimists club was founded in Oakland, California in 1921. The name comes from the Latin word soror which means sister, combined with optima, meaning the best.
The organisation said its name is best interpreted as ‘the best for women’.
Since then the group has grown exponentially around the world and is officially affiliated with the United Nations. The organisation also counts Queen Mathilde of Belgium among its ranks.
The Byblos iftar in numbers
29 or 30 days – the number of iftar services held during the holy month
50 staff members required to prepare an iftar
200 to 350 the number of people served iftar nightly
160 litres of the traditional Ramadan drink, jalab, is served in total
500 litres of soup is served during the holy month
200 kilograms of meat is used for various dishes
350 kilograms of onion is used in dishes
5 minutes – the average time that staff have to eat
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Australia (15-1): Israel Folau; Dane Haylett-Petty, Reece Hodge, Kurtley Beale, Marika Koroibete; Bernard Foley, Will Genia; David Pocock, Michael Hooper (capt), Lukhan Tui; Adam Coleman, Izack Rodda; Sekope Kepu, Tatafu Polota-Nau, Tom Robertson.
Replacements: Tolu Latu, Allan Alaalatoa, Taniela Tupou, Rob Simmons, Pete Samu, Nick Phipps, Matt Toomua, Jack Maddocks.
Ashes 2019 schedule
August 1-5: First Test, Edgbaston
August 14-18: Second Test, Lord's
August 22-26: Third Test, Headingley
September 4-8: Fourth Test, Old Trafford
September 12-16: Fifth Test, Oval
Our legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
Closing the loophole on sugary drinks
As The National reported last year, non-fizzy sugared drinks were not covered when the original tax was introduced in 2017. Sports drinks sold in supermarkets were found to contain, on average, 20 grams of sugar per 500ml bottle.
The non-fizzy drink AriZona Iced Tea contains 65 grams of sugar – about 16 teaspoons – per 680ml can. The average can costs about Dh6, which would rise to Dh9.
Drinks such as Starbucks Bottled Mocha Frappuccino contain 31g of sugar in 270ml, while Nescafe Mocha in a can contains 15.6g of sugar in a 240ml can.
Flavoured water, long-life fruit juice concentrates, pre-packaged sweetened coffee drinks fall under the ‘sweetened drink’ category
Not taxed:
Freshly squeezed fruit juices, ground coffee beans, tea leaves and pre-prepared flavoured milkshakes do not come under the ‘sweetened drink’ band.
Our family matters legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
Three-day coronation
Royal purification
The entire coronation ceremony extends over three days from May 4-6, but Saturday is the one to watch. At the time of 10:09am the royal purification ceremony begins. Wearing a white robe, the king will enter a pavilion at the Grand Palace, where he will be doused in sacred water from five rivers and four ponds in Thailand. In the distant past water was collected from specific rivers in India, reflecting the influential blend of Hindu and Buddhist cosmology on the coronation. Hindu Brahmins and the country's most senior Buddhist monks will be present. Coronation practices can be traced back thousands of years to ancient India.
The crown
Not long after royal purification rites, the king proceeds to the Baisal Daksin Throne Hall where he receives sacred water from eight directions. Symbolically that means he has received legitimacy from all directions of the kingdom. He ascends the Bhadrapitha Throne, where in regal robes he sits under a Nine-Tiered Umbrella of State. Brahmins will hand the monarch the royal regalia, including a wooden sceptre inlaid with gold, a precious stone-encrusted sword believed to have been found in a lake in northern Cambodia, slippers, and a whisk made from yak's hair.
The Great Crown of Victory is the centrepiece. Tiered, gold and weighing 7.3 kilograms, it has a diamond from India at the top. Vajiralongkorn will personally place the crown on his own head and then issues his first royal command.
The audience
On Saturday afternoon, the newly-crowned king is set to grant a "grand audience" to members of the royal family, the privy council, the cabinet and senior officials. Two hours later the king will visit the Temple of the Emerald Buddha, the most sacred space in Thailand, which on normal days is thronged with tourists. He then symbolically moves into the Royal Residence.
The procession
The main element of Sunday's ceremonies, streets across Bangkok's historic heart have been blocked off in preparation for this moment. The king will sit on a royal palanquin carried by soldiers dressed in colourful traditional garb. A 21-gun salute will start the procession. Some 200,000 people are expected to line the seven-kilometre route around the city.
Meet the people
On the last day of the ceremony Rama X will appear on the balcony of Suddhaisavarya Prasad Hall in the Grand Palace at 4:30pm "to receive the good wishes of the people". An hour later, diplomats will be given an audience at the Grand Palace. This is the only time during the ceremony that representatives of foreign governments will greet the king.
Our legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants
Rashid & Rajab
Director: Mohammed Saeed Harib
Stars: Shadi Alfons, Marwan Abdullah, Doaa Mostafa Ragab
Two stars out of five
UAE tour of the Netherlands
UAE squad: Rohan Mustafa (captain), Shaiman Anwar, Ghulam Shabber, Mohammed Qasim, Rameez Shahzad, Mohammed Usman, Adnan Mufti, Chirag Suri, Ahmed Raza, Imran Haider, Mohammed Naveed, Amjad Javed, Zahoor Khan, Qadeer Ahmed
Fixtures: Monday, first 50-over match; Wednesday, second 50-over match; Thursday, third 50-over match
The Breadwinner
Director: Nora Twomey
Starring: Saara Chaudry, Soma Chhaya, Laara Sadiq
Three stars
BRAZIL SQUAD
Alisson (Liverpool), Daniel Fuzato (Roma), Ederson (Man City); Alex Sandro (Juventus), Danilo (Juventus), Eder Militao (Real Madrid), Emerson (Real Betis), Felipe (Atletico Madrid), Marquinhos (PSG), Renan Lodi (Atletico Madrid), Thiago Silva (PSG); Arthur (Barcelona), Casemiro (Real Madrid), Douglas Luiz (Aston Villa), Fabinho (Liverpool), Lucas Paqueta (AC Milan), Philippe Coutinho (Bayern Munich); David Neres (Ajax), Gabriel Jesus (Man City), Richarlison (Everton), Roberto Firmino (Liverpool), Rodrygo (Real Madrid), Willian (Chelsea).
Dr Afridi's warning signs of digital addiction
Spending an excessive amount of time on the phone.
Neglecting personal, social, or academic responsibilities.
Losing interest in other activities or hobbies that were once enjoyed.
Having withdrawal symptoms like feeling anxious, restless, or upset when the technology is not available.
Experiencing sleep disturbances or changes in sleep patterns.
What are the guidelines?
Under 18 months: Avoid screen time altogether, except for video chatting with family.
Aged 18-24 months: If screens are introduced, it should be high-quality content watched with a caregiver to help the child understand what they are seeing.
Aged 2-5 years: Limit to one-hour per day of high-quality programming, with co-viewing whenever possible.
Aged 6-12 years: Set consistent limits on screen time to ensure it does not interfere with sleep, physical activity, or social interactions.
Teenagers: Encourage a balanced approach – screens should not replace sleep, exercise, or face-to-face socialisation.
Source: American Paediatric Association
Long Shot
Director: Jonathan Levine
Starring: Charlize Theron, Seth Rogan
Four stars
UAE currency: the story behind the money in your pockets
Film: In Syria
Dir: Philippe Van Leeuw
Starring: Hiam Abbass, Diamand Bo Abboud, Mohsen Abbas and Juliette Navis
Verdict: Four stars
